“At this (expansion) stage TCO plans building an oil processing plant with an annual capacity of 12 million tonnes of oil per year,” KMG said in a written response to Reuters questions.

“The first oil (at this stage) is forecast to flow in 2018. After the implementation of the project, the consolidated volume of oil output at the Tengiz and Korolyovskoye fields will total 37 million tonnes to 40 million tonnes per year.”

Last year TCO increased output by 15 percent to 25.9 million tonnes, cementing its position as the largest oil producer in Kazakhstan.

Kazakhstan, Central Asia’s largest economy, is the second-largest crude producer in the former Soviet Union after Russia.

Kazakhstan plans to produce 80.4 million tonnes of oil in 2011, which would increase to 132.1 million tonnes by 2020.

The start-up of the Kashagan field in the Caspian Sea, run by another international consortium, North Caspian Operating Company (NCOC), will be the main driver of the forecast growth.

KMG, which owns 16.81 percent in NCOC, said it also did not rule out borrowing to finance its share in the development of the giant field.

“The project of Kashagan’s development is financed with the company’s own funds, but in the future, if there is a lack of own funds, the project will be financed with borrowed capital,” KMG said.

“The current oil price on international markets allows KMG to fund independently a number of large investment projects, including the North Caspian project.”

Commercial production at the first phase of Kashagan is scheduled to begin by the end of 2012 or early 2013.

EXPANSION ABROAD

KazMunaiGas plans to boost its crude output to 33.7 million tonnes by 2020 from this year’s forecast of 22.1 million tonnes, the company said this week.

KMG controls London-listed KazMunaiGas Exploration Production (KMGq.L) (KMG EP) and includes its output and financial indicators in its consolidated results.

The company and its production subsidiary have repeatedly stated their intention to develop business beyond Kazakhstan’s borders. In August last year KMG EP agreed to acquire 35 pct in a North Sea exploration licence owned by BG .

In May this year KMG EP withdrew from talks to develop the Akkas natural gas field in Iraq jointly with South Korea’s KOGAS . The Korean company will now develop Iraq’s largest gas field on its own.

KazMunaiGas told Reuters it was looking for new business opportunities abroad.

“The main elements of expanding our business geography are winning new contracts in the near abroad (the CIS), where Turkmenistan and Russia are of particular interest,” KMG said.

“… and acquiring new promising assets in the far abroad — Iraq, Iran and North Africa — and forming strategic alliances with international partners to purchase foreign assets,” it added. KMG did not elaborate. (Writing by Dmitry Solovyov; Editing by Robin Paxton and David Cowell).

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About

Kazakhstan Chamber of Commerce in USA is located in New York. KazCham is an independent chamber associated with state agencies and businesses in Kazakhstan with the aim to provide members with current information on the political and investment climate, assist them in establishing government and business contacts, conduct searches of buyers and partners, organize forums and seminars, PR campaigns. Contact us at info@kazcham.com or follow on twitter.com @kazcham.